Tax on Benefits received by Olympic Medal Winners

This document covers

1. Background
2. Types of Benefits to Olympic Medallists
3. Taxability of Awards & Prizes
4. Taxability of Rewards
5. Taxability of Sponsorships

1. Background

The Olympics are the most popular worldwide. Olympic Games are multi-sport events held every four years with competitors from diverse nations. Paris hosted the 2024 Summer Olympics from July 26 to August 11. India sent 117 athletes to the 2024 Olympics. In 2024 Olympics, India earned 1 silver and 5 bronze medals.

• Javelin Throw: Neeraj Chopra — Silver
• Shooting: Manu Bhaker, Sarabjot Singh and Swapnil Kusale — Bronze
• Wrestling: Aman Sehrawat — Bronze
• Hockey: Team India (Men) — Bronze

Central and state governments offered many awards for Olympic medallists. The incentives can be cash or in kind from various organisations, entities and/or people.

Such benefits will undergo Indian taxation. Let's understand different types of prizes one would get ? The Indian government will tax these benefits the medallists gets. Let's discuss these benefit types?

Before that, let us understand the terms used to transmit benefits to winners.

1. Award — is an acknowledgement of distinction or success.
2. Prize — is the result of winning a contest or competition.
3. Reward — is given to motivate certain win or behavior.
4. Sponsorship — is a financial exchange for a favor or assistance to boost brand value or product sales.

2. Types of Benefits to Olympic Medallists?

The following are the types of benefits that might be given to Olympic Medallists

• Awards, Prizes in the form of Cash or Kind from the International Olympic Committee and the state and central governments.
• Rewards and gratuities in the form of Cash or Kind from private organizations, trusts, sporting bodies apart from Central and State Government.
• Sponsorships, or opportunities to serve as an influencer for a product or service

3. Taxability of Awards & Prizes

Taxability of Awards or Prizes received from the International Olympic Committee & the state & central governments

• Any award or prize received by the Olympic medal winner from the international Olympic Committee, Central or State Governments are not taxable in the hands of medal winner as per section 10(17A) of Income Tax Act 1961
• The award can be in the form of Cash or Kind like land, flat, Vehicles, pension, annuity etc
• The award can be in the form of lumpsum payments or recurring payments like pension or annuity
• Such award given by the central or State government would come with a certificate stating the benefit is non-taxable u/s 10(17A).

4. Taxability of Rewards

Taxability of Rewards received from Private organizations

• Generally, Companies, Trusts, Sponsors, NGO's etc announces the prizes to Olympic Medal winners in the form of cash or kind (land, flat, car etc)
• Rewards announced by these organizations are taxable in the hands of Olympic Medal Winners.
• These are taxed under the head Income from Other Sources and taxable at their slab rates.
• Receipt of vehicle as a reward is not taxable in the hands of Olympic Medal Winner as it does not form part of Capital Asset
• Refer for more understanding of how the rewards received from private organizations are taxed

5. Taxability of Sponsorships

Taxability of Sponsorships, or opportunities to serve as an influencer for a product or service

• Olympic Medal Winners render professional services by accepting sponsorships or remuneration as influencers.
• Remuneration received through such sponsorship is taxable as business or professional income.

In short, only the rewards received from Government are tax free in the hands of Olympic Medal Winners and rest all are taxable.

In order to provide a comprehensive disclosure of assets acquired, it is necessary to declare both taxable and non-taxable/exempt income, as well as assets and liabilities, at the time of tax filing.